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Think of it as a censis bureau survey. :beer:

SoBe,
I stopped reading after the first sentance. Simply because I was interested to hear what the answer was. Hey everybody, what do you think? Is it even possible to find positive cashflow in a SFH? How?

No scarcasm, just genuine curiosity, so please don't take offense.
Glenn

That's why their moto is "you can do it, we can help".

Mike
Well put. Often in the hast of responding, the shell of the concept is described and not it's complete content. Also, as NooB pointed out, quite often the obvious is not pointed out. Certainly an investor would not/should not overlook the details. THEY WILL MOST CERTAINLY LEAD TO DEMISE. No harm no foul. I had perceived the original comment as slightly insulting. It wasn't intended and now clarified. All in all, the combined message will hopefully provide insight and lessons to individuals seeking knowledge.
Glenn

This is good stuff!! Anyone else joining in?

Hey, I had a loan product that I didn't pay any interest on. It was from my parents.

Well, Mike. Thanks for the feedback. Why don't you enlighten those of us who aren't get'n right with some of your investment wisdom? How are you getting it right, or do you just describe how others get it wrong?

My illustration was not meant to be all encompassing, but simply to describe a series of transactions and the cashflow produced from it. I don't lease option the houses to unqualified buyers either, but instead rent. I don't think an $85/mo income is a good deal because it will be consumed after one repair or by management expense, or something else. I don't suggest letting occupants do repairs, because you will end up with flawed work, which by the way, where did that come into the formula?

I wish all the best of luck, but take it easy on the rhetoric.

Schockergd,

Some of the term you used, I'm not familiar with, but I think I get the gist of you rational. If I'm correct in my interpretation, it's a great plan. I use something similar. Here's what I've interpreted:

You purchase at 46k, put 5k into make ready (total 51k) and retail value is 80k minimum (determined by market sales comps) you then cashout refi at max lender allowed guidelines (here in TX it's 80% LTV on non-ower occ), pocket some and rent (is that what Land Contract means), either way income of $725. Is this correct?

The short is:
51,000 purchase repair
64,000 cashout

13,000 gain from refi

operating proforma
640/mo PITI (using rule of 1% loan amount estimation)
725/mo income

85/mo positive cashflow

I do this by buying properties at similar discount, use hard money or other short term finance solutions to acquire and rehab, then use permanent mortgage solution to cashout, hold and cashflow for income. Great strategy! Keep in mind the warning of All Cash, don't get over leveraged, if something goes wrong and you get stuck with the property and no tenant - you could end up bankrupt or foreclosed simply because you didn't have reserves to weather the storm. Lastly, his point about interest rates, borrowers that can't qualify traditionally should be charged higher rates considering the risk. Simply put, they've demonstrated that they don't fulfill their obligations to other lenders, why would it be any different with you?

Hope that helps.
Glenn

Jimbo, I'll be calling you. The more I use my SDIRA the more I learn that almost no "tax and legal professionals" know what the heck to do with it. I used a local (Dallas, TX) franchise/affiliate of Entrust called IRA Plus Southwest to act as my account administrator. I provided a buy instruction letter directing them to purchase the member holdings of an LLC that I created. That LLC has since purchased and sold 2 properties and is currently holding another in repair phase. I located a hard money lender that also utilizes his IRA in this manner, that agreed to loan the IRA a non-recourse loan (eliminating the IRS restrictions) in order to do more properties since I had been funding the purchase and repair 100%.

This leads me to my question. How did you find a LOC that's non recourse to an entity? What are the terms and conditions? Can you put me in touch with them?

I'm also learning about debt usage within this entity as it's my first time. I'm about to break the ice, so I'm anxious to know what you've discovered and how it may impact you. I feel we're both treading on virgin ground.
Glenn

Eager Texan,
Have you purchased yet? Your capital investment is sizable. I hate to see you sink that amount of money into one property. You have a number of options. I'd love to offer a few suggestions. 1)Apply your capital to a mutlifamily. This will limit your exposure to vacancy losses, which are the BIGGEST killer when it comes to rentals. Think about it, all the other expenses don't mean jack if you have $0 in income. 2) Purchase several single families and focus on a specific minimum cashflow profit for each house.

Here's my strategy. I purchase single fams at less than 70% appraised value (after repair appraised value). I purchase the property using short term financing - most of the time a 90% loan (90% of purchase and repair cost). So, my cost in the project is only 10%. I then wait until conventional lenders will allow me to refinance and cashout at which point I get my initial 10% back plus any amount not to exceed 80% of the appraised value. By this point, the property is tenant occupyied and cashflowing at least $200/mo - that's my minimum. I focus on houses with 80k-125k value. It's a good price point with lots of demand. I look for 3bedroom at minimum to fit a family. They easily rent from $750 - 1100/month.

I'd be more than happy to share more information with you and even show you a few deals that work like this.
Glenn

I'd be happy to help you out. What area of Dallas do you live in? I live near Buckner and Garland (White Rock Lake/Casa Linda). I rehab houses to sell, mostly SE Dallas (Mesquite, Pleasant Grove, Balch Springs), manage rentals, and am building a rental inventory. Send a PM and we can get together. There are several REI clubs in Dallas.
Glenn